Napster is on the ropes. Content companies such as MTV Interactive and even B2B stars like Seattle’s Loudeye Technologies downsize frantically. The once-sizzling connection between music and the Internet now threatens to fizzle, as Wall Street and venture capitalists have cooled to mere ideas and have started demanding viable business models. Some Internet music companies folded, others, like Emusic, sold themselves to the highest bidder (in Emusic’s case, Universal, for $24.6 million). But Digital Club Network (dcn.com), the live music Webcasting company founded two years ago in New York by former Irving Plaza owner Andrew Rasiej, keeps rolling along, recording thousands of shows by up-and-coming bands in hopes that a few will become superstars and make it all pay off. With nearly 50 clubs partnering exclusively with DCN, including the Showbox, and with a fresh round of funding—$3.5 million from Atlas Venture—Rasiej tells Seattle Weekly that the future still looks bright for at least one Internet music company.
Seattle Weekly: How has the rise and fall of the Internet-music convergence affected DCN?
Andrew Rasiej: That’s a good question, and particularly now that the market is imploding around us. Our focus has always been live music. We’ve always known that music was going to be distributed digitally at some point, but the success wasn’t predicated on a business model of selling music digitally. . . . We’ve been affected by the market in that a lot of the outlets for our music in syndication, other dot-com sites, don’t exist anymore. But our business is based on owning copyrights. Here’s the perfect analogy: If I was opening a vineyard and I was going to start producing wine, nobody would expect me to be selling it in the first year I opened. I’d have to plant the vines, wait for them to grow and mature, cultivate the grapes, wait until they turn into wine, and then sell and distribute. That might take 10 years. Well, in our case we bought a vineyard that already had old vines. Let’s call it the clubs. The best clubs. And we’re collecting the grapes. We still have to wait for them to mature. When we went out to get financing, we never told our funders, “Hey, we’re gonna be profitable tomorrow.” It’s going to take a little bit of time here. We’ve been building. With the market causing some pain for these other dot-coms that don’t really have a business plan because there is no digital distribution model on the Net right now, it makes it easier for us because it clears a lot of the riffraff out of the way.
SW: What about companies like RealNetworks and Microsoft that have announced deals with major labels?
AR: First of all, it’s about time. Second, it helps our business. Every time you’re talking about putting more music into the hands of the consumer—well, we own content. We already own 5,000 concerts. That’s over 50,000 songs. Why wouldn’t [Real’s] MusicNet want to offer our music to their subscribers, if they manage to get any? We’re agnostic in that respect.
SW: You’re amassing a lot of content. At what point do you flip the switch and say, “We need to make money”?
AR: It’s going to come from probably the labels or the users. . . . We keep doing this and we get 15,000 shows in our archive. If one-tenth of one percent of them becomes big . . . then we would have 150 shows that we would be able to leverage in some way. Let’s say one of them becomes the next Hootie and the Blowfish or Dave Matthews and they sell 16 million records. All we need to do is sell a couple of hundred thousand [Webcasts] of that concert to those fans and we’re golden—though chances are that the record label will buy that content from us at some point, before we get to sell it ourselves.